1981 (7) TMI 81 - SC - VAT and Sales Tax

Supreme Court: Aluminium Products /= Ingots for Sales Tax. Upheld High Court ruling.

The Supreme Court held that aluminium rolled products and extrusions are distinct commercial commodities from aluminium ingots and billets and do not fall ... Metal in its primary or original saleable form - new commercial commodity - construction of taxing notifications by contextual scheme - popular sense (ordinary meaning) of commodity words - distinction between substance and commercial commodity for singlepoint taxationMetal in its primary or original saleable form - new commercial commodity - construction of taxing notifications by contextual scheme - Whether aluminium rolled products and extrusions fall within the expression 'metal' in the notifications dated December 1, 1973 and May 30, 1975 issued under the U.P. Sales Tax Act, 1948. - HELD THAT: - The Court held that the expression 'metal' in the relevant Uttar Pradesh notifications must be read in the contextual scheme of the notifications and, in practice, has been employed to refer to the metal in its primary or original saleable form. Where subsequently fabricated or processed forms emerge as distinct marketable articles, they constitute new commercial commodities for the purposes of the notifications and may be taxed separately. The Court applied the established rule that words in a salestax statute are to be construed in their popular or ordinary sense but emphasised that the proper inference is drawn from the arrangement and scheme of the notifications themselves, which in prior notifications separately listed metals in original form and fabricated products (for example sheets and circles) as distinct entries. Precedents holding that conversion by manufacture can create a new marketable commodity (Devi Dass Gopal Krishnan) were treated as controlling; authorities or definitions developed for other regulatory contexts (such as the Aluminium (Control) Order, 1970, and technical glossaries) do not override the statutory notification scheme. The word 'including' in the 1975 entry was construed conjunctively and not as an enlargement to cover all fabricated forms within the single term 'metal.' On that basis the Court concluded there is no tenable construction under which rolled products and extrusions remain within the term 'metal' as used in the impugned notifications. [Paras 12, 13, 16, 18, 19]Aluminium rolled products and extrusions are distinct commercial commodities and do not fall within the expression 'metal' in the notifications dated December 1, 1973 and May 30, 1975; the appeals are dismissed.Final Conclusion: The Court dismissed the appeals, holding that aluminium rolled products and extrusions are not covered by the term 'metal' in the specified U.P. Sales Tax notifications and therefore constitute separate taxable commercial commodities for the periods and assessments in question. Issues Involved:1. Whether aluminium rolled products and extrusions can be described as 'metal' for the purposes of the notifications dated December 1, 1973, and May 30, 1975, under the U.P. Sales Tax Act, 1948.Issue-wise Detailed Analysis:1. Interpretation of 'Metal' in Notifications:The primary issue is whether aluminium rolled products and extrusions fall under the term 'metal' as used in the notifications dated December 1, 1973, and May 30, 1975, under the U.P. Sales Tax Act, 1948. The appellant, Hindustan Aluminium Corporation Limited, argued that their aluminium products should be classified under the category of 'metal' mentioned in the notifications, which would subject them to a lower tax rate.2. Notifications and Amendments:The notifications in question were issued under Section 3A(2) and Section 3A(2A) of the U.P. Sales Tax Act, 1948. The notification dated December 1, 1973, included 'all kinds of minerals and ores and alloys except copper, tin, zinc, nickel or alloy of these metals only' and prescribed a tax rate of 3.1/2%. The notification dated May 30, 1975, included 'all kinds of minerals, ores, metals and alloys except those included in any other notification issued under the Act' with a tax rate of 2%. This notification was later amended retrospectively on August 14, 1975, to include 'sheets and circles used in the manufacture of brass wares and scraps containing only any of the metals, copper, tin, zinc, or nickel.'3. High Court's Judgment:The High Court held that while aluminium ingots, wire bars, and billets fall under the category 'metals and alloys,' rolled products and extrusions, being different commercial commodities from ingots and billets, do not. The rolled products included plates, coils, sheets, circles, and strips, while the extrusions included bars, rods, structurals, tubes, angles, channels, and various sections.4. Appellant's Contention:The appellant contended that the High Court erred in its judgment by not considering rolled products and extrusions as merely marketable forms of ingots and billets. They argued that these products should be included under the term 'metal' as understood in common parlance and referred to various documents and publications, including the Aluminium (Control) Order, 1970.5. Supreme Court's Analysis:The Supreme Court emphasized that the interpretation of a commodity in a sales tax statute should be according to its popular sense, as understood by people conversant with the subject matter. The Court noted that the term 'metal' in the notifications generally referred to the metal in its primary marketable form. The Court observed that subsequent forms evolved from the primary form and constituting distinct commodities must be regarded as new commercial commodities.6. Contextual Scheme and Intent:The Court examined the contextual scheme and intent behind the notifications. It noted that the framers of the notifications followed a scheme where one clause dealt with the metal in its original saleable form, and another separate clause dealt with fabricated forms as new commodities. The Court concluded that aluminium ingots and billets are saleable commodities as such in the market, and the term 'metal' in the notifications referred to the metal in its primary form, not the subsequently fabricated forms.7. Precedents and Comparative Cases:The Court referred to various precedents, including Porritts & Spencer (Asia) Ltd. v. State of Haryana, Devi Dass Gopal Krishnan v. State of Punjab, and State of Madhya Bharat v. Hiralal, to support its conclusion. The Court distinguished the present case from Tungabhadra Industries Ltd. v. Commercial Tax Officer and State of Gujarat v. Shah Veljibhai Motichand, noting the differences in the nature of the raw material and the commercial commodities involved.8. Conclusion:The Supreme Court concluded that aluminium rolled products and extrusions are distinct commercial items from aluminium ingots and billets. The Court rejected the appellant's contention and upheld the High Court's judgment. The appeals were dismissed with costs.Final Judgment:The appeals fail and are dismissed with costs. The Supreme Court held that aluminium rolled products and extrusions are distinct commercial commodities from aluminium ingots and billets and do not fall under the term 'metal' as used in the notifications under the U.P. Sales Tax Act, 1948.